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S&P 500 Still Not in Bear Market Territory

With all the doom and gloom from the pro-Obama democrats and other losers you would think we were already in a bear market, but we aren’t. The S&P 500 has yet to close below 1252, which is exactly twenty percent below the record high of 1565 made in October of 2007. Unless the S&P 500 closes below 1252 it simply isn’t a bear market. The stock market almanacs and mainstream media won’t call it a bear market unless the S&P 500 closes below 1252. Otherwise it is just a correction, albeit a steep one.

Why does the S&P 500 refuse to close below 1252 in spite of all the doom and gloom? The reason is because there are still so many strong sectors that are propping up the market. Energy stocks are making record highs as are commodity stocks. Steel, potash, iron, coal, and machinery stocks keep making new highs. Meanwhile large cap tech companies like RIMM and AAPL are holding their own. Visa and Mastercard, two stocks which I have recommended for awhile, are just ten percent off record highs. You can’t have a bear market when there are so many stocks and sectors showing such huge strength. In a true bear market virtually every sector gets obliterated, but this just isn’t the case. Amazingly enough, if you remove financial companies from the S&P 500 the index is only down eleven percent from its high, which is evidence of the broad strength of the market.

We’re also still in the new era of globalism, consumerism, spendism, smartism, and hyper capitalism. The global economic boom is far from over. Boom economies of India, Brazil, Russia, and China need raw materials which is why oil, coal, potash, and metal stocks keep going higher.

The boo hoo hoo Obama democrats claim we’re in a credit crunch and a liquidity crisis and that the American consumer is ‘tapped out’, but this couldn’t be further form the truth. The only credit crunch is an imaginary, leftist media generated one. If people didn’t have access to credit why would Visa and Mastercard stock keep going up? Americans have access to huge credit in the from of credit cards and home loans, and Americans will continue to max out their credit cards to pay for food and gas, which is good for Visa and Mastercard stock. In fact, visa stock closed above $82 last Friday, up 36 percent since I recommend it.

On a final note, Barry Rithholtz from bigpicture is wrong again, as usual. Today he wrote how the S&P 500 from June 1999 to June 2008 has done nothing. Um yeah except he is forgetting that the S&P index doesn’t include dividends. Had you invested in the S&P 500 on June 1999 and held you would actually be ahead by nearly twenty percent if you include the dividends. A twenty percent return is actually pretty good considering June 1999 was nearly the peak of the last bull market. It is no surprise that none of his loyal readers point out that obvious omission since it would invalidate his argument, and possibly hurt his feelings.